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RTM Consulting

The How-to Guide to Optimizing Your

Professional Services Organization

Driving Success Throughout the PS Organization

Mark E. Sloan Chief Operating Officer

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© 2007 - 2013 RTM Consulting, LLC. All rights reserved.

THE HOW-TO GUIDE TO OPTIMIZING YOUR PROFESSIONAL SERVICES ORGANIZATION

Driving Success Throughout the PS Organization

INTRODUCTION

As consultants, we all spend considerable time thinking about our clients’ businesses. We can discuss key

elements of their strategy, business model, and most importantly, how the work we are performing for

them will positively impact their business model. Pre-sales and sales activities generate a significant

amount of information about the client’s goals / problems / needs. Proposal documents point out how our

services will address the goals / problems / needs. In delivery, project status reports and conversations

with clients stress the importance of the project to achieving the client’s objectives. Once project delivery

is complete, as we look for that “killer client testimonial,” we follow up with the client looking for

feedback on what results have been achieved.

These activities represent a great deal of work and demand considerable attention.

Additionally, these activities do not account for the time that the professional services (PS) executive

team spends on managing the tactical and operational activities of the PS organization:

Participating in client meetings – both new business development and delivery reviews

Overseeing a portfolio of projects that require checkpoints and reviews

Managing the annual process for employee reviews, promotions, salary adjustments

Interviewing candidates for the organization

Managing utilization and the resource management process

Meeting with Finance to explain and justify the PS business model.

With only 24 hours in a day, these activities can consume a significant amount of time, leaving little to no

time for the PS team to think about the PS business model:

What contribution do we want the PS business to make to the overall organization?

How do we effectively align the PS go-to-market model with the overall organization?

How can we accelerate revenue growth and resource utilization?

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In this paper, we will address these questions by laying out a framework for PS Business Optimization.

The article will:

Lay out the PS Business Optimization framework

Identify key drivers for success for each element of the framework

Define actions that the PS organization can take to impact the drivers

Provide a foundation for how a PS executive can move from tactical PS activities that maintain

the status quo to strategically driving the PS organization to new levels of success.

PROFESSIONAL SERVICES (PS) OPTIMIZATION FRAMEWORK

At the highest level, optimizing PS profitability can be summed up with the old adage, “buy low, sell

high.” That is, get good quality resources at the lowest cost possible and sell those services higher. For

years, the Big 6 consulting firms exploited this model:

Hire young, eager college graduates at salaries they thought were great but were low relative to

more experienced industry consultants

Create highly leveraged teams, primarily made up of low cost consultants, and sell those

resources at high margins.

In the early days of the consulting / PS industry’s heyday, this strategy worked. It also worked in the

wireless industry when they were able to charge $1+ per minute. At that time, while competition existed,

it was nowhere near as intense as it is today. In shopping for wireless service, you can get an “all you can

eat” plan of voice, data, and text for $109/month. I used 4,000 minutes on my wireless phone last month –

at $0.025/min. A 98% decrease in price. Fortunately, it is not that bad in the consulting and PS industry.

Managing a PS organization today requires putting together a more focused, differentiated strategy and

employing advanced tactics to manage that strategy. Fortunately, there are analogs in other industries that

PS executives can adopt, adjust and exploit.

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RTM Consulting’s PS Optimization

Framework decomposes the key

components that the PS executive needs to

focus on to drive success.

Strategy & Management

The PS Organization (PSO), embedded

within a larger company, must define its

strategic charter. Will it be focused on:

Revenue generation / customer

acquisition

Product installation

Customer service / support?

This is not to say that the PSO will not

attempt to achieve all three objectives at

different times; however, it must define its

primary purpose as there can be competing

interests across the three strategies. The

following table lays out three typical

strategies the PSO can adopt and the

implications of adopting those strategies

on performance metrics, sales and go-to-

market approach, and service offering

portfolio definition.

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REVENUE GENERATION /

CUSTOMER ACQUISITION PRODUCT INSTALLATION

CUSTOMER SERVICE /

SUPPORT

Strategic

Charter

PSO is created to drive

profitable revenue growth in

support of the overall

company’s growth

PSO is created to support

sale of product; primary

focus of the organization is

to install product as

efficiently and effectively as

possible

PSO is created to support

customer satisfaction and

retention

Implications of the Strategies

Key

Metric(s) for

PSO

Management

PSO revenue

PSO profitability

Customer acquisition

Product revenue

Product profitability

Customer satisfaction

Customer retention

Sales

PSO an active participant

in sales process; may

have own sales / sales

overlay function

Product sales drives most

sales activities, pulls in

services (e.g., practice

lead) for sales support on

complex deals

Little to no involvement

in sales process

Key

Attribute(s)

of PS

Personnel

Consultative / creative

Broad base of knowledge

related to overall PSO

focus

Focused on developing

value propositions

Operations driven

Depth of product

knowledge; the “experts”

on the product

Customer service

focused

Willing / able to spend

considerable time with

clients to “make them

happy”

Offerings

Breadth and depth of PS

offerings that both

complement and drive

the sale of the

company’s products (e.g., revenue assurance

consulting for a

telecommunications

billing software vendor) Multiple “practices” that

offer compelling

capabilities

Offerings, if defined, are

focused on the core

product

Most, if not all, work is

systems integration work

structured to support

product installation

Typically more

“customized” service to

support customer “as

needed”

May be some emphasis

on developing repeatable

approaches to supporting

customers

So, the PSO must decide “what it wants to be” and then develop the compelling value proposition and

tactics required to succeed with the chosen strategy.

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Go-to-Market: Sales

Optimizing the go-to-market structure / approach for a PSO is a critical step to enabling success. First, the

go-to-market structure should align with the overall strategy; for example, there is no need to have a

direct services sales force in a PSO with a customer service / support strategy.

Some key go-to-market

structures include a:

Direct services sales

force

Services sales support

(e.g., sales engineering

for services)

Practice lead model

As with any choice, there are

trade-offs and costs that need to

be considered. The following

table summarizes the three go-

to-market approaches depicted

here – including key factors /

objections that will need to be managed – and offers guidance on how to make each model work.

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BENEFITS THINGS TO WATCH OUT FOR HOW TO SUCCEED

Direct Services

Sales Force

Allows PSO direct

connection to the end

customer (i.e., “control

your own destiny”)

May create confusion with customer and/

or competition with product sales force

(Note: IBM Global Services can pull this

model off due to size and scale; smaller

PSOs may not be able to due to costs of

multiple sales forces)

Create communication mechanisms between sales

organizations

Conduct joint account planning sessions to align

opportunities and coverage

Create incentives for each sales force to sell the

other sales force’s offerings

Services Sales

Support

Provides PSO with a

dedicated sales team that

works with and through

the company’s overall

sales channel

Overall sales channel may not be

comfortable with bringing in “sales

support” personnel – may see it as internal

competition or “lost product revenue”

Hire services sales support personnel who 1)

understand client wins are the key objective and 2)

can check their ego at the door

Be proactive in identifying how the function can

support services sales AND not get in the way of

product sales

Pre-define services offerings to help overall sales

channel better understand what the PSO is selling

Identify (and publicly praise) the sales reps that

successfully partner with services sales support to

generate new revenue

Practice Lead

Model

Product sales

organizations like this

model because they get a

subject matter expert to

sit in front of the client

Practice leads are generally also

responsible for delivery – getting dragged

to every sales call can spread them too

thin

Practice leads may not be well versed in

other practices within the PSO – lessening

their effectiveness in front of the client if

the sales rep brings the wrong practice

lead

Develop clear pre-qualification criteria before a

practice lead visits a client

Create a pool of resources under the practice lead

that can also participate in client meetings

Identify (and publicly praise) the sales reps that

appropriately use the practice lead in sales pursuits

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Go-to-Market: Services Engineering & Marketing

The Product & Services Portfolio is one area in which PSOs can create significant differentiation and

accelerate profitable services delivery. In consulting and professional services, the answer “it depends”

rolls quickly and easily off the tongues of almost every practitioner. We are accustomed to the uniqueness

of each and every project.

Our product brethren, on the other hand, strive for that perfect day when their software can be shipped on

a CD, inserted in the CD drive, a button pressed, and presto – the software is up and running. While they

may not have reached this destination, the marketing, documentation, and sales tools that are created are

quite often centered on the concept of “repeatability.” The idea is to create a core product (software or

hardware) that meets a preponderance of market needs. Ideally configuration is the desired method to

tailor the product to the individual customer’s needs; customization addresses the very particular needs.

When dealing with PSOs, product sales reps get particularly upset with every “it depends” answer. They

are accustomed to being able to tell the customer, “If you buy this many products, it will cost you $XX.”

With services, since so much “depends,” they cannot have that conversation and hence tend to shut down

on services sales.

Leading PSOs have recognized this fact and have packaged up “repeatable solution offerings” to enable

sales to “sell services like they are a product” and to drive improvements in delivery and profitability.

From the sales side, packaging repeatable solution offerings includes defining the problem / situation

addressed, a standardized approach and timeline, representative scope, and indicative pricing. With this

information, your product sales organization (with and without the assistance of your chosen go-to-market

structure) can introduce your services and engage in client conversations, use the packaged offering as a

starting point to tailoring a solution to the client’s particular needs, and ultimately operate more self-

sufficiently with respect to services sales.

In a nutshell, product sales reps get more comfortable with selling services when they can “touch and

feel” them like they are a product. Packaging can be done on both consulting and systems integration

offerings. On the consulting side, you are packaging up the consultation you will provide; on the systems

integration side, you are defining a standard implementation approach for a particular problem / scope

area and giving representative timing and pricing (based on the pre-defined scope assumptions).

On the delivery side, the benefit of repeatability is the wealth of information that can be captured and

analyzed to improve performance. The more you deliver the packaged offerings, the more information

you will have to see how to do it better, faster, and cheaper. With improvements you can either lower

customer price to drive demand and / or maintain pricing and drive improved profit margins.

Additionally, by defining the workplan and resource load of given projects, the PSO can better manage

utilization of its resources.

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Operations Infrastructure: Resource Management

My firm and I have written extensively on the importance of focusing on the key assets of a PSO: the

people. From skill and career development to effective resource management, there are many levers to

pull that will positively impact PSO performance across key metrics of customer satisfaction, retention /

up-sell, utilization, and profitability. RTMC has developed numerous whitepapers on this topic.

Three key suggestions for driving improvements in this area include:

Deploy Just-in-Time

Resourcing® (JITR)

Getting the right person, in the right place, at the right time is critical to driving

utilization improvements

JITR facilitates the movement of resources across the organization to areas of need

and provides forecasting information to enable the PSO to proactively address

future resourcing needs – before they become a problem

Deploy Warm

Recruiting

Techniques

The Big 6 SIs – and now the India-based SIs – all deploy a college recruiting

program, going after scores of new hires every spring

For those organizations that do not have the luxury (i.e., budget) to bring people on

in this fashion, warm pool recruiting techniques enable you to identify probable

candidates for your organization while also timing their hire to coincide with real

demand

Consulting Skill

Development

PSOs hire strong technical resources and train them on the details of the PSOs

particular product; customers recognize and appreciate these capabilities

However, many PSOs leave to chance the skills required to successfully interact

with clients, including communication skills, issue management, identifying value

capture opportunities

Deploying a comprehensive “soft” or consulting skills development program can

go a long way toward improving customer satisfaction with your people and

ameliorate or avoid many potential issues

As mentioned, there is much that can be written on this topic. Please visit www.RTMConsulting.net to

learn more about the techniques described above and other ways you can positively impact Human

Capital Management.

http://www.rtmconsulting.net/

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Operations Infrastructure

Continuing along the lines of “repeatability,” it is critical to PSO success for the organization to put in the

appropriate process definition and automation infrastructure to support the organization. As PSOs, many

of us work with our clients to implement the software AND we stress the importance of engineering / re-

engineering processes to support use of the software. We need to do the same with our own PS

organizations.

Key process and infrastructure requirements within a PSO include:

Key to Success Explanation

Knowledge

Management

Capturing and documenting your own “best practices” and “things to look

out for” goes a long way to driving delivery improvements and creating

opportunities for both competitive differentiation and increased project

profitability

Delivery Methodology

Many PSOs grow through acquisition and / or hire consultants from a

variety of firms; individuals approach delivery in the same manner they

“did it before”

Deploying a standardized delivery methodology enables resources to move

from project to project without having to learn “how this project manager

does things” – speeding up delivery and improving on-time / on-budget

performance

Resource

Management Office

(RMO) and an RM

Methodology

Deploying an RMO can have dramatic improvements on utilization as

supply of resources is more accurately aligned with actual and forecast

demand. A supporting methodology to guide RM operations is imperative.

An RMO operates a sort of “air traffic controller” facilitating the

movement of available and appropriately skilled resources to areas of

need; additionally by forecasting future resource needs, RMO can identify

training and development opportunities for existing resources and reduce

the need to hire / contract additional resources

Professional Services

Automation (PSA)

A comprehensive PSA tool can help with everything from time and

expense tracking to project management

The benefits of successfully capturing and analyzing this type of

information has direct bottom line impact

o Successful T&E capture can improve cash flow through faster and

more accurate invoicing

o Analysis of time booked to projects enables PMs to proactively

manage project profitability

o An integrated project management workbench creates visibility to the

portfolio of projects enabling management to proactively address

project situations before they become issues or cost overruns

o Timely information on resource utilization and planning

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Operations Infrastructure: Effective Execution & Governance

Up to this point, the steps laid out have been about strategy and planning, designing go-to-market

structures, packaging products, and laying out the appropriate processes and infrastructure. It is now time

to execute. Many PS executives spend a majority of their time “fighting fires,” dealing with tactical

issues. By laying the foundation of the previous steps and implementing a comprehensive execution and

governance process, PS executives can free up time to spend on strategic activities.

This is not to say that tactical activities do not occur; however, by focusing on key interactions and

reviews, the PS executive can accomplish the objective without spending undue amounts of time digging

into project details. Key governance meeting / processes would include:

Regular Reviews of

Project Portfolio

Status

Over budget / off schedule projects can consume considerable executive time

dealing with both the project team and the client

Create regular (weekly, bi-weekly) high level reviews of project status; do not

spend much time on the green projects and focus energy on the red and yellow –

identifying what needs to get done by when by whom to correct the situation

Over the course of just a couple of months, I have seen the number of red / yellow

projects drop by 50% as the overall organization learns how to correct issues

before they arise

Service Offering

Reviews

You created the service offerings (or, at least you are considering it after reading

this whitepaper) – now measure and monitor them

Meet monthly to quarterly with your service offering owners (e.g., practice leads,

services engineers) to review progress: revenue (booked and forecast), pipeline,

competitive landscape, opportunities for improvement

Putting the appropriate management attention in this area, you can drive

considerable profit improvement across your portfolio

Quarterly / Semi-

Annual Succession

Planning

Let’s face it – attrition happens in the PS industry – it’s a key metric many of us

are measured on

Don’t be caught flat footed when your best people leave – create a plan for who

will step up when someone unexpectedly leaves

Do this at your direct report level and have your direct reports cascade the process

down the organization structure

Resource

Management

Interlocks

Review forecasts of resource supply / demand over a 1-6 month period

Discuss steps to address forecast resource gaps, surpluses, skills mismatches

Assign responsibilities for addressing these gaps

Quarterly Ops

Reviews

Bring your management team together on a quarterly basis to review progress

against the organization’s key metrics

Do deep dives in areas of success (to share best practices) and areas of issue (to get

the collective wisdom of the team addressing the situation)

Creating cross-organization visibility into the key metrics of your team will push

them to focus on improving their metrics prior to the next review – healthy internal

competition can be a good motivator

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CLOSING

This paper has identified a series of

actions to take for PS Business

Optimization. Some of the

recommendations provided here

may be new – many of them may

be things you say, “I knew that.”

Think of this list like an exercise

program – you know what you need

to do to get in shape: eat well,

cardio, lift weights to burn fat and

build muscle. However, you may

not always do them. This document

represents key aspects of your PS

management routine that will help

streamline your focus and heighten

your ability to execute.

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ABOUT RTM CONSULTING AND THE AUTHOR

Cincinnati-based RTM Consulting provides strategic and operational advice to assist technology

companies with increasing revenues and margins by leveraging services more effectively. Specializing in

Resource Management and Services Business Optimization, RTM Consulting helps IT hardware,

software and pure consulting businesses achieve the benefits associated with successful services

portfolios. With its unique Just-in-Time Resourcing® solution and Business Acceleration Services, RTM

Consulting helps large, medium and small firms move beyond theory to practical application of industry

best practices and achievement of exceptional results in the shortest possible period of time.

Mark E. Sloan is the COO of RTM Consulting. Mark is an industry pioneer with respect to defining and

deploying Global Resource Management processes for Consulting and Professional Service Operators.

Mark is a frequent speaker at industry events and has served as an Advisory Board Member for the

Technology Services Industry Association (TSIA). Prior to his current role as COO and Senior Founding

Partner of RTM Consulting, Mark held a number of executive consulting and entrepreneurial roles with

Accenture and Convergys.

© 2007 - 2013 RTM Consulting, LLC. All rights reserved.

Documents

The How-to Guide to Optimizing Your Professional Services ...innovergent.com/.../2013/...to-optimizing-your-pso.pdfFrom the sales side, packaging repeatable solution offerings includes